Mutations in APC are thought to initiate colon tumor development by promoting proliferation and preventing proper differentiation of colonocytes. In the previous funding period, we effectively employed zebrafish as a genetic model system to show that retinoic acid is essential for intestinal development and differentiation and that APC controls intestinal cell differentiation by controlling the production of retinoic acid. Our published studies indicate that APC regulates the expression of retinol dehydrogenases and were the first to demonstrate an essential role for, and dynamic regulation of, retinol dehydrogenases in vertebrate tissue development. Moreover, our work has established novel roles for APC and retinoic acid in promoting enterocyte differentiation. As a link between APC and retinoic acid, we demonstrated that APC controls the stability of the transcriptional co-repressor, C-terminal binding protein (CtBP) which can directly repress retinol dehydrogenases and intestinal cell differentiation. Further, we have demonstrated that dysregulation of CtBP and retinoic acid production precedes activation of Wnt signaling. This observation points to loss of retinoic acid as the initiating event following Apc mutation rather than dysregulation of Wnt. Consistent with this model, our most recent published and preliminary data define an unexpected connection between APC, retinoic acid and a novel DNA demethylase system that appears to maintain intestinal cells in a progenitor-like state in zebrafish harboring Apc mutations. In this competitive renewal, we build upon our previous studies to define the mechanistic interplay between Apc, retinoic acid and the novel DNA demethylase system in governing intestinal cell fate and differentiation. We hypothesize that the APC tumor suppressor plays an essential role in normal enterocyte differentiation by controlling the production of retinoic acid. Retinoic acid, in turn, regulates remodeling of DNA methylation within intestinal progenitor cells by suppressing the activity of a novel DNA demethylase. Downregulation of the demethylase allows methylation-dependent silencing of key genes required for intestinal differentiation.